Questions
ACCT 2051 (070) Exam #3
Single choice
Which of the following statements does not correctly describe an adjustment to net income when determining cash flows from operating activities using the indirect method?
Options
A.An increase in income taxes payable will be subtracted from net income.
B.A gain on the sale of a depreciable asset will be subtracted from net income.
C.An increase in prepaid expenses will be subtracted from net income.
D.An increase in wages payable will be added to net income.
View Explanation
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Step-by-Step Analysis
When analyzing adjustments to net income under the indirect method for cash flows from operating activities, each option reflects a different category of adjustment and its proper sign.
Option 1: 'An increase in income taxes payable will be subtracted from net income.' Increases in current liabilities, such as taxes payable, are typically ad......Login to view full explanationLog in for full answers
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